You Read a Story in the Newspaper Announcing the Proposed

Multiple Choice

You read a story in the newspaper announcing the proposed merger of Dell Computer and Gateway. The merger is expected to greatly increase Gateway's profitability. If you decide to invest in Gateway stock,you can expect to earn

A) above average returns since you will share in the higher profits.
B) above average returns since your stock price will definitely appreciate as higher profits are earned.
C) below average returns since computer makers have low profit rates.
D) a normal return since stock prices adjust to reflect expected changes in profitability almost immediately.